When the Walt Disney Co. acquired 20th Century Fox Film for $71 billion, it also assumed more than $13 billion of Fox’s outstanding debt.

Despite ongoing downsizing at Fox Studios and selloff of Fox’s regional sports TV networks, Disney Sept. 3 announced the commencement of an offering of one or more series of senior unsecured notes and fixed rate senior unsecured notes pursuant to an effective shelf registration statement filed with the Securities and Exchange Commission.

The new bonds are guaranteed by TWDC Enterprises 18 Corp., a subsidiary of Disney.

Disney said it intends to use the net proceeds from the bond offering pay down previously existing notes related to the Fox acquisition, in addition to prepaying in full the aggregate principal amount outstanding under a “364-Day Credit Agreement,” dated as of March 15, 2019, which lists Disney as the borrower.

Lionsgate co-owned Epix with Viacom and MGM, until selling its stake to the venerable studio in 2017.

The two-year deal, first reported by The Information, enables Santa Monica-based Lionsgate to migrate its movies to Starz Play, the subscription streaming service launched in 2016.

Lionsgate acquired Starz in 2016 for $4.4 billion.

Notably, it was Starz that started licensing studio movies to OTT services through an exclusive deal with Netflix in 2008 that gave the SVOD pioneer access to 2,500 movies for pennies on the dollar from Disney, Sony Pictures and others.

Six years later, then-CEO Chris Albrecht would call the Netflix agreement “terrible,” as it helped the streaming service generate subscribers looking for cheaper access to Hollywood movies.

“For a very low price [Netflix] got access to all our stuff and it devalued our wholesale and resale prices,” Albrecht told an investor group. He left Starz earlier this year.

Comcast reportedly is in talks with Disney to sell its 30% stake in Hulu, which includes online television platform Hulu with Live TV, according to CNBC, which cited internal sources.

CNBC is owned by Comcast business unit NBC Universal.

Disney currently owns 60% of the 12-year-old streaming service with 25 million subscribers after it acquired 20th Century Fox. AT&T’s WarnerMedia unit just sold its 10% stake back to Hulu for $1.43 billion.

The discussions, which CNBC said are in the preliminary stage, were revealed hours after Comcast chairman/CEO Brian Roberts told investors the cable giant enjoyed owning a large stake of a Disney asset.

“On Hulu, the relationship with NBC, it’s very much in everybody’s interest to maintain,” Roberts said on the all. “And we have no new news today on it, other than it’s really valuable. And we’re really glad we own a large piece of it.”

At the same time, with Disney firmly in control of Hulu and Comcast heretofore reluctant to move too far away from the pay-TV business model, selling its stake in an over-the-top business could help Comcast alleviate more than $100 billion in corporate debt following the $39 billion Sky acquisition.

Comcast reportedly could get $4.5 billion for its stake in Hulu, which lost $1.5 billion in 2018. Disney doesn’t expect Hulu to become profitable until 2024 — and only after possible international expansion.

At the same time, NBC Universal CEO Steve Burke remains skeptical of OTT business model, including Netflix.

“To be worth $150 billion, someday you’ve got to make at least $10 billion in EBITDA,” Burke told CNBC last year. “There’s at least a chance Netflix never makes that.”

Comcast, which only recently incorporated direct access to Netflix for its Xfinity pay-TV subscribers, plans to launch an OTT service for Xfinity in 2020.

As part of the deal, Disney has agreed to sell 21st Century Fox’s Regional Sports Networks.

Disney is also acquiring approximately $19.8 billion in cash and assuming approximately $19.2 billion of debt of 21st Century Fox in the acquisition. The deal price implies a total equity value of approximately $71 billion and a total transaction value of approximately $71 billion.

“This is an extraordinary and historic moment for us — one that will create significant long-term value for our company and our shareholders,” Disney CEO Bob Iger said in a statement. “Combining Disney’s and 21st Century Fox’s wealth of creative content and proven talent creates the preeminent global entertainment company, well positioned to lead in an incredibly dynamic and transformative era.”

The Walt Disney Co. March 12 said it expects to close its $71.3 billion acquisition of 20th Century Fox Film Corp. and related businesses on March 20.

In a filing, Disney said 21st Century Fox shareholders have until March 14 to decide how they wish to receive their share/cash-based compensation. Disney said it would calculate the amount of cash and/or shares of new Disney common stock to be distributed to each 21st Century Fox stockholder based on all valid elections received and in accordance with the merger agreement.

About half ($35.7 billion) of the acquisition price is in cash.

Consummation of the mega merger makes Disney the largest Hollywood studio, in addition to majority owner of Hulu and online TV subsidiary Hulu with Live TV.

In its most-recent fiscal period, 20th Century Fox Studios reported operating income of $193 million, a 47% increase over the $131 million reported in the previous-year quarter.

Quarterly segment revenue decreased 4% to $2.16 billion, from $2.24 billion, primarily reflecting lower home entertainment revenue at the film studio and lower syndication revenue at the television production studio.

Through half the fiscal year (ended Dec. 31, 2018), revenue dropped less than 6% at $3.97 billion, compared with $4.2 billion in the previous-year period.

Original television production is all the rage in Hollywood, especially at Netflix. The SVOD pioneer perhaps overstaffed with VPs mining for original episodic programming.

Jennifer Gonsky, director of global original series at Netflix, has left to join Fox Searchlight TV as head of business affairs — the 11-month-old episodic programming unit of Fox Searchlight Pictures. Gonsky spent 11 years at FX before joining Netflix in 2016.

Jennifer Gonsky

At Netflix Gonsky spearheaded original series “The Chronicles of Narnia,” “Ratched” and “The Politician,” among others.

“I am thrilled with the opportunity to join Fox Searchlight Television,” Gonsky said in a statement. “I’m excited to collaborate with this incredibly passionate team who are working to bring the same high-quality projects and dynamic storytelling that Searchlight Pictures is known for to television audiences.”

Gonsky reports to David Greenbaum and Matthew Greenfield, co-presidents of production for film and television at Fox Searchlight Pictures, in Los Angeles. The company will soon be part of Disney once regulatory approval of its $71.3 billion acquisition of 20th Century Fox Film Corp. is finalized.

Longtime Disney home entertainment executive Janice Marinelli has been promoted to president, global content sales and distribution as part of planned management changes following the media giant’s $71 billion acquisition of 20th Century Fox Film Corp.

Marinelli, who had been president of Disney/ABC Home Entertainment and Television Distribution, reports to Kevin Mayer, chairman of The Walt Disney Co.’s direct-to-consumer & international segment.

Separately, Rebecca Campbell, president, The Walt Disney Company EMEA, continues in her position with added oversight of Russia and former satellite countries in the Soviet Union.

Jan Koeppen, president of Fox Networks Group Europe and Africa, will transition to president, television and direct-to-consumer, The Walt Disney Company EMEA.

Diego Lerner, president, The Walt Disney Company Latin America, continues in his position, while Uday Shankar, president, 21st Century Fox, Asia, and CEO of Star India, becomes chairman, Star and Disney India, and president, The Walt Disney Company Asia Pacific.

All report to Mayer.

“The planned restructuring of our business units outside of the U.S. will result in a stronger, more agile organization, one that is better able to pivot and capitalize on the many opportunities present in today’s fast-changing and increasingly complex global marketplace,” Mayer said in a statement. “Once the acquisition is complete, all three regions will be led by exceptional, highly experienced executives who will combine the ‘best of the best’ talent from both organizations. This new structure and the outstanding leadership team we’ve put in place are clear demonstrations of our strong commitment to integrating operations and thoughtfully executing our strategic priorities around the globe.”

Marinelli spoke a year ago at the Dec. 2017 Variety Hall of Fame awards dinner and ceremony, drawing solid applause when she advised her fellow home entertainment executives to “just keep swimming.”

The line, from the hit Disney film Finding Nemo, seemed to resonate with the several hundred execs in the room, many of whom have been contending with increasingly choppy seas for the better part of a decade.

Later, she doubled down on her beliefs in the home entertainment sector – including the physical disc – in an interview with Media Play News.

“Pysical consumption continues to be a vibrant, viable and top-performing line of business for us and it is also proving to be a very valuable resource in the transition to digital with e-copy redemption,” she said. “This year the in-home division broke and set new records with four bestselling physical titles in the top 10 to date including tentpoles Star Wars: Rogue One, Moana, Guardians of the Galaxy Vol. 2 and Beauty and the Beast. As viewing habits and consumer consumption rapidly evolve, we continue to evaluate our offerings on a regular basis and what will best meet the needs and demands of our customers. This year we vigorously expanded into the 4K Ultra HD Blu-ray premium format beginning with inaugural title Guardians of the Galaxy Vol. 2, which quickly rose to the top of the industry’s 4K physical sales chart.”

She also talked up digital ownership, with a nod to the then just-launched Movies Anywhere service for movies. “Consumer centricity was without a doubt a defining characteristic of 2017, which was most notably addressed by the launch of the multi-studio digital locker Movies Anywhere,” she said. “Movies Anywhere is a huge win for the consumer, providing them with more freedom, flexibility and utility and their digital library can now be viewed through a range of devices and digital retailers, anytime and anywhere. The strength of the studios and digital retailers that have come together at launch is unprecedented.”

Hulu may be losing millions in equity for its corporate parents, but that isn’t stopping The Walt Disney Co. from dreaming big going forward about the 11-year-old SVOD service and online TV platform.

Disney, which attributed $10 million in Q4 equity losses to higher programming, marketing and labor costs at Hulu, partially offset by growth in subscription (20+ million) and advertising revenue, will become majority (60%) owner of the SVOD when its acquisition of 20thCentury Fox Film Corp. is finalized.

Hulu’s other corporate owners include Comcast (30%) and WarnerMedia (10%).

“With this [Fox] acquisition comes not only some great IP, but some excellent talent, particularly on the television side,” Iger said. “And we aim to use the television production capabilities of the combined company to fuel Hulu with a lot more original programming … [content] that we feel will enable Hulu to compete even more aggressively in the marketplace.”

“And that’s clearly attractive to advertisers, which I think has been somewhat underappreciated about Hulu in that it … can offer targeted ads,” Iger said.

Hulu’s base $7.99 subscription plan features ad-supported content, while the $11.99 plan is ad-free. Iger says the service – especially the $39.99 Hulu With Live TV – has some price elasticity of demand.

“I think there’s an opportunity to improve – or I should say increase our pricing there,” he said.

Twenty-First Century Fox Nov. 7 disclosed a first-quarter (ended Sept. 30) equity loss of $114 million regarding its 30% ownership stake in Hulu. The loss represented an 84% increase from an equity loss of $62 million during the previous-year period.

Hulu, which is co-owned by Disney, Comcast and WarnerMedia, continues to generate significant losses on paper to its corporate owners, who license hundreds of millions of dollars in content to the 20+ million subscriber over-the-top video service.

While Hulu is nominally losing several billion dollars per year, its “losses” essentially amount to the excess it pays to its four sponsors over the revenues it generates, according to Wedbush Securities media analyst Michael Pachter.

“If the four [corporate] sponsors find a way to grow Hulu’s subscriber base, it should be able to achieve breakeven, and it should manage to gain market share from Netflix,” Pachter wrote in a recent note.

“Ultimately, we expect Hulu to become a formidable competitor to Netflix, particularly should Disney and Warner Bros. layer their own streaming offerings as premium additions to a basic Hulu subscription,” Pachter wrote.

Meanwhile, 20thCentury Fox Film (which includes 20thCentury Fox Home Entertainment) reported operating income of $277 million, an 8% increase from the $256 million reported in the prior-year quarter. The increase reflected higher contributions from the television production studio led by higher SVOD licensing of animated product.

Quarterly revenue decreased 7% to $1.82 billion, primarily reflecting lower theatrical revenue from a lower volume and mix of films released in the current quarter partially offset by higher SVOD revenue at the television production studio.

“We continue to deliver against our growth plan even as we make important strides toward completing our Disney transaction and launching Fox in the first half of 2019,” executive chairmen Rupert Murdoch and his son Lachlan said in a statement.

Separately, Fox posted a $147 million equity gain from its 39% stake in British satellite TV operator Sky – up 34% from an equity gain of $110 million last year. Fox recently sold much of its Sky stake to Comcast.

NEWS ANALYSIS — As expected, Comcast Corp. increased its all-cash offer for British satellite TV operator Sky to $34 billion (£26 billion), or £14.75 per share, exceeding 21st Century Fox’s revised offer of £14 per share. Fox, which is controlled by Rupert Murdoch, currently owns 39% of Sky.

This came the day before the British government — after months of regulatory review — formally cleared Fox’s pursuit for remaining interest in Sky.

“It’s now a matter for Sky shareholders to decide whether to accept 21stCentury Fox’s bid,” Jeremy Wright, U.K. cultural and media secretary, said in a July 12 statement.

Which could be meaningless considering the third player (Disney) in this high-stakes media consolidation battle last month upped its bid for Fox to $71.3 billion (which includes Fox’s stake in Sky) after Comcast offered $65 billion — topping the Mickey Mouse’s company’s initial $52.4 billion acquisition amount.

Disney CEO Bob Iger has called Sky – with 23 million subscribers in the U.K., Germany and Italy, and a budding over-the-top video business – the “crown jewel” in the Fox deal.

Comcast claims its superior cash offer (Disney’s bid is cash and stock) has been recommended by an independent committee on Sky’s board of directors.

The company says it has the relevant regulatory approvals in the European Union, Austria, Germany, and Italy — and expects to complete the acquisition before the end of October.

In a statement, the Philadelphia-based media giant said it has long admired Sky and believes the satellite operator is an outstanding company and a great fit with Comcast Cable.

“Today’s [July 11] announcement further underscores Comcast’s belief and its commitment to owning Sky,” said the company headed by cable veteran Brian Roberts.

Fox and Disney shareholders are slated to vote July 27 on the latter’s bid for 20th Century Fox Film, Sky and related assets. This gives Comcast about two weeks to up its Fox bid. Or does it?

BTIG Research senior analyst Rich Greenfield — in response to media scuttlebutt Comcast and Disney could stop the fiscal escalations with Comcast taking Sky and Disney opting for Fox’s assets — says such a move would be detrimental to both sides.

He said combining Disney and 20th Century Fox Film would dwarf Comcast-owned Universal Studios, while Disney abandoning Sky would give Comcast greater distribution.

“Why start a fight you do not want to finish?” Greenfield wrote in a blog note. “If Disney’s acquisition goal is adding 100% owned and controlled subscriber relationships, why go through all this effort and allow Comcast to own all of or at the very least control Sky?”